Hmmm.....That's not what happened here.
When I pasted that link into the URL bar, it went straight to the Youtube App.
What iPhone OS are you running?
3.1.1 (I think...It's charging right now)...
Because when I paste it into the URL bar, it opens a youtube page, and then I can click on a thumbnail of the video to watch it, but when I click the link, it opens directly in the youtube app, and when the video is done, it returns to my search results (or whatever section of the app I was last on).